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DENVER-The central business district is showing the biggest turnaround of all of the submarkets, according to the latest office report by Denver-based Fuller Real Estate. The CBD showed positive absorption of 580,000 sf, according to Fuller’s mid-year report. Oil and gas companies alone are expected to take an additional 200,000 sf to 400,000 sf by year’s end, Fuller is predicting.

“This resulted in a decrease in the vacancy rate of 1.5% to an overall (vacancy rate) of 16.2%,” according to the report. “The Southeast market’s absorption, while not as significant as in the second half of 2004, continued to improve with over 125,000 sf of absorption, reducing the vacancy rate to 21%.”

However, not all markets could boast positive absorption. Fuller notes that Aurora is showing negative absorption of 60,000 sf and the Colorado Boulevard market negative absorption of 70,000 sf.

Still, “the Denver area had an impressive 1.1 million sf of positive net absorption during the first half of 2005,” according to Fuller. “This healthy activity lowered the overall vacancy rate to 18.2%, including sublease space.”

The report adds that current leasing activity is especially strong with tenants seeking less than 20,000 sf. “There continues to be significant ‘organic’ growth among smaller, locally based companies who are hiring and growing,” Fuller notes. “Much of the market’s absorption can be attributed to these smaller firms who, while not making the headlines, are having a very positive effect on the Denver market.”

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